Phillips 66 · NYSE:PSX
Phillips 66 — Citi Global Energy and Utilities Conference 2015
37 slides from Phillips 66's conference presentation, May 13, 2015
Slide 1: Execution
Execution Citi Global Energy and Utilities Conference May 13, 2015
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Wo
Slide 3: Phillips 66
Phillips 66 Diversified portfolio of leading downstream businesses Resilient cash flow through the commodity cycle Disciplined capital allocation Chemicals and Midstream growth Share repurchases and dividends Financial flexibility 3
Slide 4: Phillips 66 Financial Highlights
Phillips 66 Financial Highlights Segment Adjusted EBITDA 1Q 2015 3.0 $B Adjusted EBITDA $1.8 B 2.0 Capital expenditures $1.1 B 1.0 Distributions $0.7 B 0.0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Average Cash from PSXP $1.3 B 2013 2014 2015 M&S Chemicals Midstream Refining See appendix for footnotes. 4
Slide 5: Phillips 66 Partners Financial Highlights
Phillips 66 Partners Financial Highlights 0.40 Distribution / LP Unit ($) 1Q 2015 0.35 Distributable cash flow $41.9 MM 0.30 Adjusted EBITDA $46.6 MM 0.25 0.3700 Public equity issuance $396 MM 0.3400 0.3168 0.20 0.3017 0.2743 Public debt issuance $1.1 B 0.2125* 0.2248 0.15 (MQD) Acquired pipeline as
Slide 6: Segment Strategy
Segment Strategy Midstream: Growth Chemicals: Growth Refining: Marketing and Enhance Returns Specialties: Selective Growth Execute Sweeny hub Grow CPChem organically Optimize crude slate Expand European retail Grow integrated Advance olefins and Expand export capability marketing Transportation syst
Slide 7: Midstream
Midstream 2014 EBITDA 2018E EBITDA NGL NGL fractionation capacity growing to 200 MBD Fractionator One start up 3Q 2015 LPG export facility start up 4Q 2016 Transportation Beaumont crude/products hub Bakken to Patoka/Beaumont pipelines Fee Based Market Based DCP EBITDA excluded. See appendix for addi
Slide 8: Midstream EBITDA Growth
Midstream EBITDA Growth $B PSXP ~ 2.3 PSX Growth and in-flight projects 1.1 2018E 0.7 ~ 1.2 2018E and in-flight 0.3 projects 0.4 1Q 2015 Refining Logistics Frac-1/ Transportation & Run-Rate EBITDA Run-Rate Annual EBITDA LPG Export Terminal Other NGL Growth DCP EBITDA excluded. See appendix for addit
Slide 9: Phillips 66 Partners Growth
Phillips 66 Partners Growth $B Fee-based business model 8 - 10 1.1 Dropdown Proceeds Growing cash flows Distributions 30% distribution CAGR through 2018 0.3 1.8 Funding Midstream growth 1Q 2015 2018E 1Q 2015 2018E Run-Rate Annual Cumulative Cash to PSX EBITDA since IPO See appendix for footnotes. 9
Slide 10: DCP Midstream
DCP Midstream Major U.S. midstream business Largest NGL producer Largest natural gas processing company Third largest NGL pipeline operator Footprint of strategically integrated assets Growing gathering and processing business 10
Slide 11: CPChem
CPChem Phillips 66 Chemicals Adjusted ROCE Leading petrochemical company 35% Feedstock advantaged 30% 10.5 B Lb/yr worldwide ethylene capacity 25% Strong global aromatics position 20% USGC Petrochemicals project on track 15% $6 B estimated capital spend 40% complete, start-up 2Q 2017 10% 3.3 B Lb/yr
Slide 12: Refining
Refining 2.2 MMBD Global Refining Capacity Optimizing crude slate Improving yields Central Expanding export capability Atlantic Corridor West Coast Basin/Europe 492 MBD 360 MBD 588 MBD Managing costs Gulf Coast Heavy Light/ 738 MBD Medium Enhancing portfolio Worldwide 12
Slide 13: Marketing and Specialties
Marketing and Specialties Adjusted EBITDA High-returning businesses 1.5 $B U.S. Marketing Avg. $1.2 B Wholesale network ~8,600 branded sites 1.0 International Marketing Low-cost, high-volume business 0.5 ~1,520 sites Specialties Finished lubricants 0.0 Base oil joint venture 2009 2010 2011 2012 2013
Slide 14: Financial Strategy
Financial Strategy 2014E – 2016E Ensuring financial flexibility Investment grade credit rating Adequate liquidity Funding transformational growth Cash from operations Distributions Reinvestment Dropdowns to PSXP Returning capital to shareholders Dividend growth Ongoing share repurchases 14
Slide 15: 2015 Capital Budget
2015 Capital Budget $3.4 B Growth capital Sweeny Fractionator One LPG Export Terminal Bakken to Patoka/Beaumont pipelines Beaumont Terminal expansion $0.2 B for PSXP projects PSX Sustaining Refining Returns M&S Growth Midstream Growth $1.2 B Sustaining capital PSXP Growth 15
Slide 16: Distributions
Distributions Share Count and Capital Returned Dividend Growth Quarterly ¢/share $6.6 B 56 624 MM 590 MM 542 MM 20 3Q 4Q 1Q 3Q 4Q 2Q 2012 2013 2015 2012 2013 2015 $1.7 B remaining authorized share repurchases 180% dividend growth See appendix for footnotes. 16
Slide 17: Creating Value
Creating Value Enterprise Value Uniquely positioned portfolio Disciplined capital allocation More than 30% EBITDA growth Multiple expansion Commitment to distributions 2014 2018E Strong balance sheet Midstream PSXP Chemicals M&S Refining 17
Slide 18: Appendix: Institutional Investors Contact
Appendix Institutional Investors Contact Kevin Mitchell InvestorRelations@p66.com Vice President, Investor Relations 832-765-2297 Rosy Zuklic Manager, Investor Relations
Slide 19: Footnotes
Footnotes Slide 4 PSXP is a consolidated subsidiary of PSX. Accordingly, quarterly cash distributions paid from PSXP to PSX, and consideration paid by PSXP to PSX in a dropdown transaction, both eliminate in consolidation and do not impact PSX’s consolidated cash balance. PSX’s consolidated cash bal
Slide 20: Footnotes
Footnotes Slide 9 See footnote to slide 4 for information on the elimination in consolidation of transactions between PSXP and Phillips 66. Slide 11 Growth capital reflects 100% CPChem growth capital. Growth EBITDA (& start-up year) includes: 1- hexene (2014), 10th Sweeny furnace (2014), NAO expansi
Slide 21: 2015 Sensitivities – Phillips 66
2015 Sensitivities – Phillips 66 Net Income Midstream $MM 10¢/Gal Increase in NGL price 30 $1/MMBtu Increase in Natural Gas price 25 $10/BBL Increase in WTI price 15 Chemicals 1¢/Lb Increase in Chain Margin (Ethylene, Polyethylene, NAO) 35 Worldwide Refining (assuming 91% refining utilization) For a
Slide 22: Phillips 66 Capital Program
Phillips 66 Capital Program Millions of Dollars 2015 Budget Sustaining Growth Total Capital Expenditures and Investments Consolidated Midstream(1) Transportation 148 1,084 1,232 NGL 19 1,912 1,931 167 2,996 3,163 Chemicals - - - Refining(2) 813 299 1,112 Marketing and Specialties 78 92 170 Corporate
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations PSXP Run Rate EBITDA PSXP 2014 and 2018 run rate EBITDA estimates were derived on an EBITDA-only basis. Accordingly, elements of net income including tax and depreciation information are not available. Together, these items generally result in a significant uplift in EBITDA
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2009 2010 2011 2012 2013 2014 Phillips 66 Chemicals Segment ROCE Numerator Net Income $ 228 486 716 823 987 1,137 After-tax interest expense - - - - - - GAAP ROCE earnings 228 486 716 823 987 1,137 Special Items - - - 157 - 72 Adjusted ROCE earnings $ 228
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars Millions of Dollars 2009-2014 2009-2014 Marketing & Specialties Adjusted EBITDA Reconciliation 2009 2010 2011 2012 2013 2014 Average Marketing & Specialties Adjusted EBITDA Reconciliation 2009 2010 2011 2012 2013 2014 Average U.S. Marketing Specialties U.
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2009-2014 Adjusted EBITDA by Segment Reconciliation 2009 2010 2011 2012 2013 2014 Average Midstream Midstream net income attributable to Phillips 66 $ 384 384 2,147 52 469 507 657 Plus: Net income attributable to noncontrolling interests 3 5 5 7 17 35 12
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2009-2014 Adjusted EBITDA by Segment Reconciliation 2009 2010 2011 2012 2013 2014 Average Refining Refining net income (loss) attributable to Phillips 66 $ (556) (661) 1,369 3,091 1,747 1,771 1,127 Plus: Provision for income taxes (296) (121) 808 1,998 1,
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2009-2014 Adjusted EBITDA by Segment Reconciliation 2009 2010 2011 2012 2013 2014 Average Marketing and Specialties Marketing and Specialties net income attributable to Phillips 66 $ 541 655 692 544 894 1,034 727 Plus: Provision for income taxes 457 398 4
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2009-2014 Adjusted EBITDA by Segment Reconciliation 2009 2010 2011 2012 2013 2014 Average Phillips 66 Phillips 66 net income attributable to Phillips 66 $ 476 735 4,775 4,124 3,726 4,762 3,100 Less: Income from discontinued operations 19 30 43 48 61 706 1
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars Low High 100% CPChem Incremental Project Earnings Projections Estimated incremental net income $ 1,000 1,313 Plus: Estimated income taxes 20 27 Estimated net interest expense - - Estimated depreciation 280 260 Estimated EBITDA $ 1,300 1,600 Millions of Do
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2014 Marketing & Phillips 66 Midstream Chemicals Refining Specialties Corporate Phillips 66 ROCE Numerator Net Income $ 4,797 541 1,137 1,771 1,034 (393) After-tax interest expense 173 - - - - 173 GAAP ROCE earnings 4,970 541 1,137 1,771 1,034 (220) Speci
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars Average 2009-2014 Marketing & Midstream Chemicals Refining Specialties FCF Yield Numerator Cash From Operations GAAP $ 559 230 2,615 563 Less: Change in Non-Cash Working Cap. (13) (0) 152 (127) Cash From Operations (excluding WC) 572 230 2,463 690 Less: P
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2009 2010 2011 2012 2013 2014 100% CPChem Net Income $ 615 1,388 1,970 2,403 2,743 3,288 Plus: Income taxes 26 42 57 67 71 86 Net interest expense 58 63 18 8 (3) (2) Depreciation and amortization 285 255 258 265 278 296 EBITDA $ 984 1,748 2,303 2,743 3,08
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2013 2014 2015 Adjusted EBITDA by Segment Reconciliation 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Average Midstream Midstream net income $ 114 92 152 128 194 117 124 107 78 123 Plus: Provision for income taxes 63 49 87 65 108 63 70 68 38 68 Depreciation and amortizatio
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2013 2014 2015 Adjusted EBITDA by Segment Reconciliation 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Average Refining Refining net income $ 904 455 (30) 418 306 390 558 517 538 451 Plus: Provision for income taxes 467 280 22 266 202 257 301 (64) 226 217 Depreciation and a
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Millions of Dollars 2013 2014 2015 Adjusted EBITDA by Segment Reconciliation 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Average Corporate Corporate net income (loss) $ (95) (126) (113) (97) (81) (121) (91) (100) (126) (106) Plus: Provision for income taxes (80) (60) (43) (80) (78) (61) (58)
Slide 37: Adjusted EBITDA and Distributable Cash Flow Reconciliation to Net Income
Adjusted EBITDA and Distributable Cash Flow Reconciliation to Net Income $ MM 1Q 2015 4Q 2014 3Q 2014 2Q 2014 1Q 2014 Net Income $ 35.4 $ 36.3 $ 30.0 $ 30.9 $ 27.2 Plus: Depreciation 5.1 4.5 4.2 3.9 3.6 Net interest expense 5.8 2.1 1.4 1.3 0.4 Amortization of deferred rentals 0.1 0.1 0.1 0.1 0.1 Pro
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